Fear sells newspapers.
Sometimes a newspaper discovers a story that should legitimately scare the living daylights out of their readers. For some inexplicable reason, a journalist working for the Express on Sunday suddenly realized that UK house prices might be a tadge on the high side. So, putting pen to paper, the journo produced this nightmare scenario for his readers.
"Experts fear a crash is coming that could wipe at least £450billion off the value of the country's housing stock. The far-reaching consequences would include a spate of bankruptcies and repossessions as home owners, mortgaged to the hilt, suddenly found their biggest asset falling in value.
Thousands more would face the agonising uncertainty of negative equity, where the value of their house falls below the outstanding mortgage. Many experts accept that a crash is not a matter of "if", but "when".
Despite a continuing rise in prices in the first quarter of 2007, they warn that a downturn could be only months away and that 2008 could see the 12-year boom come to an end with a "correction" at least as severe as the last crash 18 years ago, when prices plummeted by 15 per cent heralding a recession from which it took the country five years to recover."
The article produced to interesting numbers on the state of today's housing market
1. In mid-1991, UK home owners owed £308billion to mortgage lenders. This has more than tripled to £1,025billion, a rise of 8.5 per cent a year.
2. In July 1993, unsecured debt totalled £52.5billion. It now stands at £212 billion, an average rise of 11 per cent a year. Yet average earnings have climbed by just 4.2 per cent a year since 1997.